The Directors have pleasure in presenting their 6th Report together
 with the audited Accounts of your Company for the year ended 31st
 March, 2011.
 
 Financial Highlights
 
 Summary of Financial results for the year is as under: -
 
 Motilal Oswal Financial Services Limited (Standalone)
 
                                                          Rs. in Crores
                                          Year ended         Year ended
                                    31st March, 2011   31st March, 2010
 
 Income                                        64.25              64.26
 
 Profit before Interest and Taxation           57.70              60.16
 
 Interest                                     (1.16)             (2.85)
 
 Profit before Taxation                        56.54              57.31 
 
 Less : Provision for Taxation
 
 Current Tax                                   12.73              13.74
 
 Deferred Tax Asset                             1.15               1.17
 
 Profit for the year                           42.66              42.40
 
 Balance brought forward from previous year    35.13              22.41
 
 Profit Available for appropriation            77.79              64.81 
 
 Less: Appropriations
 
 Transfer to Statutory Reserve                  8.53               8.48
 
 Proposed Dividend                             20.23              17.18
 
 Dividend Distribution Tax                      3.28               0.63
 
 Transfer to General Reserve                    4.27               3.39
 
 Balance of Profit carried forward             41.48              35.13
 
 
 Summary of Consolidated Financial results of the Company and its
 subsidiaries for the year is as under: -
 
                                                          Rs. in Crores
                                    31st March, 2011   31st March, 2010
 
 Income                                       600.37             645.32
 
 Profit before Interest, Depreciation 
 and Taxation and Exceptional Items           229.56             276.98
 
 Interest                                     (5.69)             (9.62)
 
 Depreciation                                (13.13)            (14.19)
 
 Profit before Taxation and Exceptional 
 Items                                        210.74             253.17
 
 Exceptional Items                                 –               0.06
 
 Profit before Taxation                       210.74             253.23 
 
 Less : Provision for Taxation
 
 Current Tax                                   67.25              80.19
 
 Deferred Tax Asset / (Liability)               3.30             (1.79)
 
 Wealth Tax                                     0.03               0.02
 
 Tax for the prior year                         0.66               0.39
 
 
 
 Profit after tax before Minority Interest    139.50             174.42
 
 Minority Interest in profits                 (2.44)             (3.97)
 
 Profit after Tax and Minority Interest       137.06             170.45
 
 Profit brought forward from previous year    418.98             282.09
 
 Profit available for the Appropriations      556.04             452.54 
 
 Less: Appropriations
 
 Transfer to Statutory Reserve & Capital 
 Redemption Reserve                             9.13               8.48
 
 Pre acquisition (Profits) / Loss                  –             (0.51)
 
 Proposed Dividend                             21.54              17.18
 
 Distribution tax on Proposed Dividend          6.76               2.85
 
 Transfer to General Reserve                   15.64               5.56
 
 Balance of Profit carried to Balance Sheet   502.96             418.98
 
 
 Dividend
 
 Keeping in view the overall performance during the year, your Directors
 are pleased to recommend a dividend of Rs. 1.40 per Equity Share on the
 face value of Rs. 1 each being 140% dividend, payable to those members
 whose names appear in the Register of Members as on the Book Closure
 Date. The Dividend and dividend distribution tax will absorb a sum of
 Rs. 23.5 crores.
 
 Results of Operations (MOFSL Standalone)
 
 The standalone revenues for the year were Rs. 64.25 crores, largely
 flat as compared to Rs. 64.26 crores last year. Interest income went up
 by 55% to Rs. 39.66 crores, on account of an increase in the average
 loan book size, as well as participation in certain IPO financing
 transactions for the Coal India, Power Grid and MOIL issues. Income
 from arbitrage operations was lower as compared to last financial year
 due to lower deployment of surplus funds in arbitrage.
 
 Due to higher operating expenses and provisioning for standard loan
 assets as required by the RBI, the total expenses (before depreciation
 and interest) registered a 59.44% jump to Rs. 6.54 crores this year.
 Profit before depreciation, interest, and taxation (EBITDA) decreased
 by 4.07% this year, from Rs. 60.16 crores to Rs. 57.71 crores. With a
 reduction in the Companys average borrowing this year, interest and
 finance charges fell by 59.40%. Hence, the Companys net profit
 increased marginally by 0.62% to Rs. 42.66 crores.
 
 The detailed results of operations of the Company are given in the
 Management Discussion & Analysis forming part of this Report.
 
 Consolidated Results of Operations
 
 The Consolidated Revenues of the Company for the year were Rs. 600.37
 crores, a decline of 6.97% as compared to the previous year.
 
 – Broking and related revenues declined by 4.78% to Rs. 433.37 crores
 this year. The market volumes have seen a dramatic shift towards the
 low-yield options segment which contributed 57% of total volumes, as
 compared to 37% a year back.  This disproportionate rise of low
 yielding options segment has resulted in a drop of our overall market
 share from 3.2% to 2.5% this year. However, our market share in the
 cash segment remains stable. As of 31st March, 2011 we had a total of
 709,041 customers, including 628,012 retail and distribution clients.
 Our retail distribution stands at 1,644 outlets across 611 cities.
 
 – Investment banking fees fell by 38.70% to Rs. 39.81 crores this year.
 This is attributed to revenue booking on few deals in advanced stages
 of execution getting postponed to the next year. However, the deal
 pipeline remains robust for the next year.
 
 – Fund-based income for the year was Rs. 73.79 crores, a growth of
 13.73%. This was boosted by a 53.89% growth in interest income to Rs.
 38.94 crores, as a result of the increase in the average loan book size
 this year.
 
 – Asset management fees increased by 6.66% to Rs. 42.73 crores. With
 Rs. 374 crores of assets managed under our three ETFs, the mutual fund
 fees increased this year. PMS fees went up by 18.08% to Rs. 29.28
 crores, as PMS assets grew from Rs. 981.7 crores to Rs. 1,258.4 crores
 this year.
 
 – Other income declined by 47.45% to Rs. 10.67 crores, as the previous
 year included profit on sale of investments of Rs. 11.23 crores.
 
 Total expenses remained largely flat for the year, at Rs. 370.81
 crores. The decline in brokerage commission earned reduced the
 brokerage shared with intermediaries by 10.95% to Rs. 138.96 crores. On
 the other hand, other operating costs and marketing/ brand promotion
 expenses increased, due to the launch of the three mutual funds this
 year. Due to the lower revenues and constant costs level this year,
 Profit before depreciation, interest, exceptional items and taxation
 (EBITDA) decreased by 17.12% to Rs. 229.56 crores. EBITDA margin
 reduced from 43% to 38%. Net profit for the year after minority
 interest stood at Rs. 137.06 crores, a decline of 19.59%.
 
 The Consolidated Financial Statements of the Company and its
 subsidiaries prepared in accordance with ‘Accounting Standard - 21
 prescribed by The Institute of Chartered Accountants of India, form
 part of the Annual Report and the Accounts. The Balance Sheet, Profit
 and Loss Account, Reports of the Board of Directors and Auditors of the
 subsidiaries have not been attached with the Balance Sheet of the
 Company as per the general exemption provided under Section 212(8) of
 the Companies Act, 1956 by the Ministry of Corporate Affairs, issued
 vide General Circular No. 2/2011 dated 8th February, 2011.
 
 The Company hereby undertakes that annual accounts of the subsidiary
 companies and the related detailed information shall be made available
 to shareholders of the holding and subsidiary companies seeking such
 information at any point of time.  The annual accounts of the
 subsidiary companies shall also be kept for inspection by any
 shareholders in the registered office of the Company and of the
 subsidiary companies concerned. The Company shall furnish a hard copy
 of details of accounts of subsidiaries to any shareholder on demand.
 
 The detailed results of operations of the Company and its subsidiaries
 are given in the Management Discussion & Analysis forming part of this
 report.
 
 Future Outlook
 
 Indian capital markets witnessed a challenging year with volatile FII
 net flows, muted retail participation in equities, growing shift
 towards low-yielding options and lower value of ECM deals. These were
 reflected in the overall market performance as well as in our own
 business performance.
 
 We strongly believe that India is a great growth story and is likely to
 become a US$ 5 trillion economy by 2020. Backed by strong savings,
 there would be tremendous growth opportunities for the firms operating
 in the financial services space.
 
 During the current year, we have laid a strong foundation for each of
 our business to scale up and grab a meaningful share of these
 opportunities.
 
 Credit Rating
 
 The Company continues to enjoy the highest rating of ‘P1+ assigned by
 CRISIL Limited to the Short-term Debt Programme of Rs. 400 crores of
 your Company. The rating indicates the highest degree of safety with
 regard to timely payment of interest and principal on the instrument.
 
 CRISIL Limited also reaffirmed the rating of ‘P1+ to the Short-term
 Debt Programme of Rs. 400 crores of Motilal Oswal Securities Limited, a
 subsidiary of the Company.
 
 Finance
 
 During the year under review, to meet the working capital requirements,
 the Company has issued Commercial Papers and Unsecured Non-convertible
 Debentures.
 
 Employees Stock Option Schemes (ESOS)
 
 Details required to be provided under the Securities and Exchange Board
 of India (Employee Stock Option Scheme and Employee Stock Purchase
 Scheme) Guidelines, 1999 are set out in Annexure to this Report.
 
 Directors
 
 Mr. Ramesh Agarwal and Mr. Madhav Bhatkuly, Independent Directors
 retire by rotation at the forthcoming Annual General Meeting and due to
 their respective preoccupations do not offer themselves for
 re-appointment.
 
 The Board of Directors re-appointed Mr. Motilal Oswal as the Managing
 Director of the Company, for a further period of 5 years, with effect
 from 18th January, 2011, subject to the approval of the Members at the
 forthcoming Annual General Meeting of the Company.
 
 Mr. Vivek Paranjpe was appointed as an Additional Director on 28th
 January, 2011 by the Board of Directors. It would be required to
 appoint him as a Director by the Members at the forthcoming Annual
 General Meeting.
 
 Directors Responsibility Statement
 
 Pursuant to section 217(2AA) of the Companies Act, 1956, your Directors
 confirm that:
 
 (i) in the preparation of the annual accounts, the applicable
 accounting standards have been followed;
 
 (ii) they have, in the selection of the accounting policies, consulted
 the Statutory Auditors and these have been applied consistently and
 reasonable and prudent judgments and estimates have been made so as to
 give a true and fair view of the state of affairs of the Company as at
 31st March, 2011 and of the Profit of the Company for the year ended on
 that date;
 
 (iii) proper and sufficient care has been taken for the maintenance of
 adequate accounting records in accordance with the provisions of the
 Companies Act, 1956 for safeguarding the assets of the Company and for
 preventing and detecting fraud and other irregularities; and
 
 (iv) the annual accounts have been prepared on a going concern basis.
 
 Audit Committee
 
 The Audit Committee presently comprises of Mr. Balkumar Agarwal
 (Chairman of the Committee), Mr. Ramesh Agarwal, Mr.  Madhav Bhatkuly
 and Mr. Raamdeo Agrawal.
 
 Remuneration / Compensation Committee
 
 The Remuneration/Compensation Committee of the Board of Directors
 presently comprises of Mr. Balkumar Agarwal (Chairman of the
 Committee), Mr. Ramesh Agarwal and Mr. Motilal Oswal.
 
 Shareholders / Investors Grievance Committee
 
 The Shareholders/Investors Grievance Committee of the Board of
 Directors presently comprises of Mr. Balkumar Agarwal (Chairman of the
 Committee), Mr. Motilal Oswal and Mr. Raamdeo Agrawal.
 
 Nomination Committee
 
 The Nomination Committee of the Board of Directors presently comprises
 of Mr. Motilal Oswal and Mr. Raamdeo Agrawal.
 
 Risk Management Committee
 
 The Risk Management Committee of the Board of Directors presently
 comprises of Mr. Motilal Oswal and Mr. Navin Agarwal.
 
 Corporate Governance
 
 A report on the Corporate Governance along with a certificate from the
 Auditors of the Company regarding the compliance of conditions of
 Corporate Governance as also the Management Discussion and Analysis
 Report as stipulated under Clause 49 of the Listing Agreement are
 annexed to this Report.
 
 Auditors
 
 Messrs Haribhakti & Co., Chartered Accountants, retire as Auditors of
 the Company at the forthcoming Annual General Meeting and have given
 their consent for re-appointment. The members will be required to
 appoint Auditors for the current year and fix their remuneration.
 
 Fixed Deposits and Loans / Advances
 
 The Company has not accepted any deposits from the public or employees
 during the year under review.
 
 The particulars of loans/advances and investment in its own shares by
 listed companies, their subsidiaries, associates, etc., required to be
 disclosed in the annual accounts of the company pursuant to Clause 32
 of the Listing Agreement with the Company, are furnished separately.
 
 Conservation of Energy and Technology Absorption and Foreign Exchange
 Earnings and Outgo
 
 In view of the nature of activities which are being carried on by the
 Company, Rules 2A and 2B of the Companies (Disclosure of Particulars in
 the Report of Board of Directors) Rules, 1988 concerning conservation
 of energy and technology absorption respectively are not applicable to
 the Company.
 
 There was no inflow of foreign exchange during the year under review.
 Details of the foreign exchange outflow are given in the notes to
 Accounts.
 
 Particulars of employees as required under section 217(2A) of the
 Companies Act, 1956 and Rules framed thereunder
 
 In accordance with the provisions of Section 217(2A) of the Companies
 Act, 1956 and the Rules framed thereunder, the names and other
 particulars of employees are set out in the Annexure to the Directors
 Report. In terms of the provisions of Section 219(1)(b)(iv) of the
 Companies Act, 1956, the Directors Report is being sent to all the
 Shareholders of the Company excluding the aforesaid Annexure. The
 Annexure is available for inspection at the Registered Office of the
 Company. Any shareholder interested in obtaining a copy of the said
 Annexure may write to the Company Secretary & Compliance Officer at the
 Registered Office of the Company.
 
 Acknowledgements
 
 Your Directors take this opportunity to thank the Authorities, Bankers,
 Shareholders and the Customers of the Company for their continued
 support to the Company. The Directors also place on record their
 sincere appreciation of the contributions made by every member of the
 MOFSL family for their dedicated efforts that made these results
 achievable.
 
 
 
 For and on behalf of the Board
 
 Motilal Oswal
 Chairman & Managing Director
 
 Mumbai, 30th April, 2011